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David Cameron has promised, or at any rate indicated, that a newly-elected Conservative government would in 2017 hold an In/Out referendum on EU membership. As the Conservatives are generally regarded as unlikely to win the general election in 2015, Cameron’s promise may not amount to much. Nevertheless, the debate on the UK’s relationship with the EU will be intense at least until the general election and probably for some years thereafter. The purpose of this week’s e-mail note is to describe key features of the international scene, particularly those relating to Europe’s role in the world, as background to the debate. The main point is simple, that the EU’s share in world output and population is falling sharply, and the importance of the EU to the UK’s international trade and finance will decline.

The focus is on two dates, 2017 for obvious reasons and 2059. 2059 is chosen because it is 42 years from 2017, while 2017 is 42 years from 1975, the last time that the British public was consulted in a referendum on EU membership. By 2017 British politicians would have taken 42 years to refresh the original mandate for UK involvement in ‘the European construction’. The most neutral assumption is therefore that – if that mandate were renewed in 2017 – they would take another 42 years to seek to refresh it again. (This note expands the argument on an article in the February 2013 issue of Standpoint.)

David Cameron has promised that in 2017 a newly-elected Conservative government would hold an In/Out referendum on our membership of the European Union. What will the world economy look like four years from now and, in particular, how vital will our trading relationship with the EU be to us? 2017 will be 42 years after the 1975 referendum, the first and so far only popular vote on the UK’s position in ‘the European construction’. Suppose that in 2017 the British people vote to stay in and that a similar 42-year wait follows before the next testing of public opinion. Can anything useful be said today about the world of 2059?

The EU and the Eurozone in the world economy in 2017

To answer the first question let us consult the website of the International Monetary Fund. As the data there may come as a shock to our Eurocentric politicians, it needs to be emphasized that the IMF is a good, unbiased source. The IMF is far from perfect in its behaviour or forward vision, but it is at least well-informed, objective and impartial relative to most of the alternative authorities. The key message is that the importance of the European Union in the world economy has declined, is declining and will decline further. (2017 is in fact the last year for which it made projections in its October 2012 World Economic Outlookpublication and the related database.)

In the last few decades the EU has been the dominant market for British exporters, being typically the destination for between 50 and 60 per cent of all the goods and services that we sell abroad. This is hardly surprising, as Britain is geographically part of Europe, and the EU in the 1980s and 1990s accounted for a high share of world output. In 1980 the EU’s share of world output was almost a third, at 31.1 per cent. In the early 1990s, as the plans for the single currency were being advanced, it still represented over a quarter of the world economy.

However, its subsequent fall from grace has been abrupt and severe. (See the chart above.) According to the IMF, the EU’s share of world output last year was 18.8 per cent and in 2017 will be down to 17.1 per cent. Its planners may have dreamt that the new single currency would by the 2020s have replaced the dollar as the world’s leading currency. But the Eurozone’s share of world output has dropped even faster than that of the EU. Last year it was 13.3 per cent and in 2017 the IMF expects it to be down to 11.9 per cent. The Eurozone will never overtake the USA economically, while the dollar will continue to outshine the euro as an international currency.

Given these trends, the EU’s role as a market for our products has weakened. At present our exports of goods to the EU and the rest of the world are roughly the same, while our exports of services to the rest of the world are probably above those to the EU. (The geographical composition of services trade is more difficult to track.) Over the four years to the referendum there can be little doubt that the rest of the world will overtake the EU as the UK’s largest market, a fact which will be highlighted by those in favour of withdrawal.

The EU and the Eurozone in the world economy in 2059

The debate on EU membership is for the current generation, but not only for us. In such fundamental matters we are custodians for our children and grandchildren. So what about 2059? Worthwhile estimates of national outputs do not extend to 50 year from now. However, the United Nations does have a team of statisticians which prepares demographic projections out for almost 100 years.

Although the population forecasts are beset by uncertainty, the UN’s are as authoritative as any available. In recognition of the difficulties, three cases are offered for discussion (a high-, middle- and low-variant). Let us take the middle variant for simplicity. When the UK joined the Common Market in 1973, Europe without Russia (then still the hegemonic power in Eastern Europe) accounted for over 15 per cent of the world’s population. But, according to the UN, by 2060 (i.e., so close to 2059 as to be more or less the same thing) that figure will be down to 6 per cent, while the citizens of the three big Western European powers with a long-term EU commitment – Germany, France and Italy – will be only 2 per cent of the world’s population. The equivalents of Merkel, Hollande and Monti will matter to the politics of their nations in 2059, and they will matter to us as one of their immediate neighbours. All the same, 98 per cent of the world’s people will be living in other countries.

A striking feature of the chart above is that the demographics of the four main countries of ‘British’ settlement (the USA, Australia, Canada and New Zealand) are very different from those of our European neighbours. (I have included the USA as a country of ‘British’ settlement, although of course the British element in the USA’s population [so-called ‘Albion’s seed’] has been heavily diluted since the late 19th century. It remains customary to define ‘the Anglosphere’ as including the USA as well as the UK and the nations more definitely and recently of British settlement.) The first post-war generation was somewhat larger in the countries of British settlement than in the three large European nations, but not dramatically so. However, the gap has widened appreciably in the last 40 years and is expected to keep on widening all through the 21st century. By 2060 the population of the countries of British settlement will be two-and-a-half times that of Germany, France and Italy combined; by 2100 it will be over three times larger. Given these demographic patterns, the case for associating ourselves politically and culturally, and in terms of law and constitution, with our foreign- language-speaking neighbours is surely rather strained.

The 21st century will be increasingly an Anglophone century. That is implied by the contrast between population change in the advanced countries of the so-called ‘Anglosphere’ (i.e., the four countries discussed above, plus the UK itself) and in the principal European countries. The argument is further strengthened by population patterns for a wider concept of the English-speaking world which incorporates the nations of south Asia (India, Pakistan, Bangladesh, Sri Lanka, Myanmar) and Africa. In the chart below south Asia and Africa are deemed ‘English-speaking’, in that the language of law and business is to a large extent English in these parts of the world. (North Africa perhaps should not be included here. I am in a hurry.)

In 1950 the Anglosphere, widely understood to include the USA, south Asia and Africa, held 37 per cent of the world’s population. Today the ratio is somewhat higher, but not markedly so, at about 45 per cent. But in the second half of the 21st century the Anglosphere will be increasingly dominant, accounting for 56 per cent of the world’s population in 2060 (i.e., ‘in 2059’, more or less) and 62 per cent in 2100.

The world is changing rapidly. The inevitable result of those changes is that the EU’s economic and commercial importance to us in the 21st century will collapse. Of course, free trade between the UK and the EU is to our benefit, and we should try to maintain that if we leave the EU. But the EU’s significance in the world at large is falling sharply, and the possible 2017 referendum and the growing debate on our EU membership need to be seen in that perspective.